Bitcoin Plummets After Mooted Korean Trading Ban

Bitcoin plunged millions of won on Thursday after the government here said it is considering closing down cryptocurrency exchanges.

Justice Minister Park Sang-ki told reporters his ministry "is preparing legislation that basically bans any transactions based on a virtual currency through the trading floor."

If the exchanges are closed, the market for virtual money scaled at W4-6 trillion a day will officially disappear, though determined investors could go through other countries (US$1=W1,072).

Justice Minister Park Sang-ki speaks at the government complex in Gwacheon, Gyeonggi Province on Thursday. /Yonhap

Financial authorities want to prohibit cryptocurrency-related bank transactions immediately if they detect any illicit speculation. Police are investigating suspicions of gambling by virtual currency exchange Coinone, while the National Tax Service is launching a probe of Bithumb, Korea's biggest cryptocurrency exchange.

Soon after Park's announcement the Cheong Wa Dae website was inundated with complaints. Around 60,000 people had posted messages by late afternoon protesting against the plans.

The huge backlash prompted the presidential office to step in, with presidential spokesman Yoon Young-chan saying, "Nothing has been decided."

There were rumors that Cheong Wa Dae might back off since 60 percent of cryptocurrency investors are in their 20s and 30s, Moon's key support base.

Bitcoin plunged after CoinMarketCap, a global index of cryptocurrency prices, removed a number of Korean exchanges from its price calculations on Monday, warning of a bubble. That sent the international price of a Bitcoin plummeting 13 percent to US$13,900.

Prices fluctuated wildly Thursday, falling more than 25 percent to around W15.5 million, only to recover to W20 million as investors snapped up bargains.